The debt limit in simpler times:
P.S. This is a repost from 2011.
Are you suffering fiscal cliff fatigue yet?
I am, but that doesn’t mean I don’t enjoy a good fiscal cliff video. Here are six of the best, some wonky, some wacky.
1. David Wessel, Wall Street Journal: Standing on an actual Potomac cliff
2. Salman Khan, Khan Academy: For beginners
3. The Simpsons: The most popular fiscal cliff video by far
4. Felix Salmon, Reuters: Legos and Clifford the dog (get it?)
5. Merle Hazard: Surfing on the fiscal cliff
And if you will forgive a little self-promotion:
6. Me, Urban Institute and the Tax Policy Center: What happens to taxes?
In real life, economists never get elected president (sorry Larry Kotlikoff), probably with good reason.
In fiction, though, our odds are better. Jed Barlett is one of the most popular presidents ever, and a Nobel Laurate to boot.
And now the Planet Money team is offering up a new, faux candidate for 2012. His six-point plan for getting America going again – built on the suggestions of a diverse group of well-known economists — is five parts tax reform (repeal the mortgage interest deduction, repeal the tax benefit for employer-provided health insurance, eliminate the corporate income tax, institute a carbon tax, tax consumption not saving) and one part marijuana legalization.
Here’s his first campaign ad:
I don’t think President Obama, Governor Romney, or even Governor Johnson have much to fear.
Among my idiosyncracies are two footwear anti-fetishes: I hate flip flops and high heels. I have never mastered the dark art of walking in flip flops, and I have always been troubled when women teeter at the edge of falling because of shoes designed for fashion (allegedly) rather than function.
Nonetheless, I enjoyed Thursday’s Wall Street Journal piece about the engineering, some would say architecture, of contemporary high heels. I was also pleased that columnist Christina Binkley emphasized some of the negatives early in her piece:
High heels can exact a heavy toll on the body, pushing weight forward onto the ball of the foot and toes and stressing the back and legs. Most doctors recommend a maximum height of 2 inches.
But with heels, many women trade comfort for style. Women spent $38.5 billion on shoes in the U.S. last year, according to NPD Group, and more than half of those sales were for heels over 3 inches high. High heels are seen as sexy and powerful. Stars on the red carpet clamor for the highest heels possible–leading designers who want their shoes photographed into an arms race for height.
That “arms race” comment got me to thinking. Perhaps there’s an externality here? Are women trying to be taller than other women? If Betty has 2 inch heels, does that mean Veronica wants 2 and a half inch heels? And that Betty will then want 3 inch heels? If so, high heels are an example of the kind of pointless competition that Robert Frank highlights in his recent book, “The Darwin Economy“. As noted in the book description
[Such] competition often leads to “arms races,” encouraging behaviors that not only cause enormous harm to the group but also provide no lasting advantages for individuals, since any gains tend to be relative and mutually offsetting. The good news is that we have the ability to tame the Darwin economy. The best solution is not to prohibit harmful behaviors but to tax them. By doing so, we could make the economic pie larger, eliminate government debt, and provide better public services, all without requiring painful sacrifices from anyone.
Hence today’s question: Are high heels an example of such misguided competition? If so, should we tax them? (Bonus question: Should we tax noisy flip flops?)
P.S. The book description is not correct about the absence of “painful sacrifice.” Someone out there will still purchase such goods (otherwise there would be no revenue to ”eliminate government debt”), and there’s a good chance they will view their tax payments as a sacrifice.
Ran into Felix Salmon out at the Kauffman Foundation’s economic bloggers confab. His latest Felix TV breaks the contemporary art market down into two simple metrics: $ per spot and $ per stripe.
Feliz says buy spots. But a word of warning: Damien Hirst seems hellbent on flooding the dot market. Somehow I think the price of a dot will plummet when he releases his painting with 2 million dots.
With apologies to Christmas carol purists, my latest Christian Science Monitor column offers up the twelve days of Christmas for our weak economy. I am no Jeff Foxworthy, so please forgive the poetic license and imprecise scanning. Oh, and kudos to my editor for letting me keep in the reference to Festivus.
As the folks in the streets of Oakland and the halls of Congress remind us, we don’t lack for challenges this holiday season.
Despite glimmers of improvement, the US economy remains lackluster and Washington seems unable to get anything passed to help, even a payroll tax extension that all sides want. Things are worse in Europe. Japan still struggles to recover from two decades of weak growth and the shock of this year’s earthquake, tsunami, and nuclear disaster. Even highflying China and Brazil find their economies slowing.
But it is the season of hope. So rather than gather around the Festivus pole to air grievances, let’s visualize a better world. Here are the gifts I would bestow on the world economy for the 12 days of Christmas:
12 AAA nations. At this writing, 12 European nations have a triple-A credit rating from Standard & Poor’s, but those top-notch ratings are in jeopardy. Thanks to the European financial crisis, S&P put 15 eurozone nations on credit watch, with a real risk of downgrades. It would be a remarkable gift if a year from now, all 12 AAA nations remain so.
11 percent Dow gain. A so-called Santa rally would buoy investor spirits globally.
10 more Steve Jobses. In October, America lost its most iconic entrepreneur. We could use many more of him to drive new economic activity.
9 percent BRIC growth. As late as April, forecasters were calling for Brazil and Russia (the first two of the BRIC nations) to grow by about 4 percent through 2014, while India was to speed ahead at slightly over 8 percent and China at 9.5 percent. That forecast now looks optimistic, but these emerging economies have the size and dynamism to reenergize the world economy.
8 percent EU jobless. The unemployment rate is already above 10 percent in the European Union (compared with 8.6 percent in the United States). Europe’s financial crisis and economic contraction threaten to push it higher still. The faster its job growth, the easier its debt problems can be solved.
7 Fed governors. In the face of political gridlock, the Federal Reserve has been the one Washington institution able to take action to contain crises. But it has been understaffed throughout the financial crisis. Only five of seven governors are in place. The president and the Senate should fill the vacancies.
6 million home sales. Existing home sales have been running at a 5 million annual clip* with new sales around 300,000. Once the housing market hits bottom, perhaps combined sales can move back to a healthier combined level of 6 million.
5 percent growth. Growth is essential for creating jobs and easing Washington’s budget strains. But the tepid 2 percent growth of recent quarters isn’t enough to trim the rolls of the unemployed.
4 million jobs. A stretch goal to be sure – the US hasn’t created 4 million jobs in a single year since 1994. But even that miraculous growth would leave payroll employment more than 2 million below its peak before the worst of the financial crisis.
$3 trillion cuts. Despite all the hype, the super committee failed to make any headway on America’s fiscal challenges. Budget experts, myself included, had encouraged the panel to “go big” with $4 trillion in budget cuts over the next decade. That proved a bridge too far. With $1 trillion in budget cuts already baked in the cake, let’s hope that the presidential candidates offer plans to get to at least $3 trillion more.
2 new currencies. The euro doesn’t make sense for Greece – and probably at least one other debt-laden nation on Europe’s periphery.
And a fundamental tax reform.
* The home sales goal has gotten much harder. Yesterday, the National Association of Realtors revised down the annual pace of existing home sales by almost a million units. Oops.